Centrality and Pricing in Spatially Differentiated Markets: The Case of Gasoline
AbstractThis paper highlights the importance of "centrality" for pricing. Firms characterised by a more central position in a spatial network are more powerful in terms of having a stronger impact on their competitors' prices and on equilibrium prices. These propositions are derived from a simple theoretical model and tested empirically for the retail gasoline market in Vienna (Austria). We compute different measures of network centrality by using information on the locations of gasoline stations in the road network. Results from a spatial autoregressive model confirm that the strategic interaction in pricing between competitors is significantly related to their degree of centrality.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by WIFO in its series WIFO Working Papers with number 432.
Length: 37 pages
Date of creation: 28 Aug 2012
Date of revision:
Network centrality; Spatial differentiation; Gasoline prices;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-29 (All new papers)
- NEP-CSE-2012-07-29 (Economics of Strategic Management)
- NEP-INO-2012-07-29 (Innovation)
- NEP-SBM-2012-07-29 (Small Business Management)
- NEP-TID-2012-07-29 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Benjamin Atkinson & Andrew Eckert & Douglas S. West, 2009. "Price Matching And The Domino Effect In A Retail Gasoline Market," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 568-588, 07.
- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
- Janet S. Netz & Beck A. Taylor, 2002. "Maximum Or Minimum Differentiation? Location Patterns Of Retail Outlets," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 162-175, February.
- Bouckaert, J., 1995.
"Momopolistic Competition with a Mail Order Business,"
9562, Tilburg - Center for Economic Research.
- Bouckaert, Jan, 2000. "Monopolistic competition with a mail order business," Economics Letters, Elsevier, vol. 66(3), pages 303-310, March.
- Bouckaert, J.M.C., 1995. "Monopolistic competition with a mail order business," Discussion Paper 1995-62, Tilburg University, Center for Economic Research.
- Justine S. Hastings, 2004. "Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California," American Economic Review, American Economic Association, vol. 94(1), pages 317-328, March.
- Dieter Pennerstorfer, 2009. "Spatial price competition in retail gasoline markets: evidence from Austria," The Annals of Regional Science, Springer, vol. 43(1), pages 133-158, March.
- G�ran Therborn & K.C. Ho, 2009. "Introduction," City, Taylor & Francis Journals, vol. 13(1), pages 53-62, March.
- Braid, Ralph M., 1989. "Retail competition along intersecting roadways," Regional Science and Urban Economics, Elsevier, vol. 19(1), pages 107-112, February.
- Lance J. Bachmeier & James M. Griffin, 2003. "New Evidence on Asymmetric Gasoline Price Responses," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 772-776, August.
- Madden Paul & Pezzino Mario, 2011.
"Oligopoly on a Salop Circle with Centre,"
The B.E. Journal of Economic Analysis & Policy,
De Gruyter, vol. 11(1), pages 1-30, January.
- Michael H. Riordan & Yongmin Chen, 2005.
"Price and Variety in the Spokes Model,"
0405-20, Columbia University, Department of Economics.
- Matthew Lewis & Michael Noel, 2011.
"The Speed of Gasoline Price Response in Markets with and without Edgeworth Cycles,"
The Review of Economics and Statistics,
MIT Press, vol. 93(2), pages 672-682, May.
- Lewis, Matt & Noel, Michael, 2009. "The Speed of Gasoline Price Response in Markets With and Without Edgeworth Cycles," University of California at San Diego, Economics Working Paper Series qt8j36j1s1, Department of Economics, UC San Diego.
- Matthew Lewis, 2008. "PRICE DISPERSION AND COMPETITION WITH DIFFERENTIATED SELLERS -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 654-678, 09.
- Sridhar Balasubramanian, 1998. "Mail versus Mall: A Strategic Analysis of Competition between Direct Marketers and Conventional Retailers," Marketing Science, INFORMS, vol. 17(3), pages 181-195.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ilse Schulz).
If references are entirely missing, you can add them using this form.